Since its inception, one of the key applications of the darknet has been its ongoing e-commerce sector, specifically in the trade of illegal goods and services. The FBI brought the world’s attention to the underground world of darknet markets when they shut down the now infamous Silk Road in 2013 and arrested its unsuspecting founder.

While Silk Road was one of the largest darknet markets in service at the time, there are now thousands of vendors distributed across some 50 markets who are actively trading across the deepest and darkest parts of the internet.

THE SILK ROAD LINEAGE

Cryptoanarchist Ross Ulbricht was only 26 years old when, in 2011, he launched Silk Road using The Onion Router’s (Tor's) Hidden Services protocol. According to Ulbricht, the origin of this darknet marketplace was experimental in nature.

[The Silk Road is] an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.”

— Ross Ulbricht, Founder, The Silk Road

The Silk Road experiment proved to be short lived, however, when in 2013 Ulbricht was charged and subsequently convicted on seven counts of varying extents, including charges of money laundering, computer hacking, conspiracy to traffic narcotics and attempting to have six people killed.

By this point, the Silk Road marketplace had become a mecca for buying and selling illegal drugs and narcotics.

Just one month after the original Silk Road was shut down, a new version (Silk Road 2.0) appeared in its place. The marketplace was successfully operated for almost a year by administrator Blake Benthall before being seized by the FBI. Authorities shut down the market and all pages within its domain, replacing each landing page with the above image.

Seeing a rebranding opportunity, a then less-popular darknet market, Diabolus Market, rebranded as Silk Road 3 Reloaded, capitalizing on the brand and popularity of the Silk Road lineage. Shortly thereafter, Silk Road 3 Reloaded appeared on I2P with a similar look and feel to the original Silk Road market. The marketplace is still in operation today, with stronger encryption and security measures in place to evade confiscation.

BEYOND THE SILK ROAD

While the Silk Road was a pioneer in the darknet market space, it does not hold the record for the largest market in sales or listings to date.Over the last four years, darknet markets have surged in popularity. Those with significant sales in the past include Agora,Evolution,andNucleus markets(all now defunct). It is estimated that since 2013, darknet market sales have skyrocketed, now averaging between $300,000 and $500,000 USD per day collectively across all markets.

With this surge, we’ve also observed an uptick in the online presence of local and Federal authorities. With the growing presence of law enforcement, darknet underground markets are constantly adapting, both in their .onion domain addresses and brand name to avoid apprehension.

Of the current active darknet markets, AlphaBay holds the top spot for sales and total number of listings (last recorded at 294,739 distinct listings and growing), with The Dream Market, Valhalla (Silkkitie) and Hansa falling close behind. These marketplaces feature multiple .onion domains for access during peak times of Tor network activity and require an invitation to gain access (as either a buyer or vendor) to reduce the potential for scammers. They also employ captcha based encryption on login to avoid a distributed denial of service (DDos) attack.

WHATS FOR SALE?

While the most profitable items for sale in these markets are drugs, both illegal and prescription, darknet markets also feature non-drug related offerings, such as:

Cannabis related products, MDMA and ecstasy lead the illegal drug market, while the top prescription drugs include Alprazolam, Xanax and Oxycodone. (Source)

VISA OR MASTERCARD?

Neither. If you’re going to do business on the darknet, then you'll need to use the principal transaction method in darknet markets: cryptocurrency. Bitcoin (BTC), a commonly used cryptocurrency, currently trades quite high. As of now, 1 BTC is equal to approximately $1201.26 USD, with the value of bitcoin continuing to rise.

Buyers must be aware that many seemingly legitimate darknet markets end up scamming their entire user base and the administrators flee with millions of US dollars in BTC.

THE FUTURE OF DARKNET MARKETS

As darknet markets frequently come and go, it's hard to know when a marketplace will disappear. In 2015, the leading marketplace at the time, Agora, announced it was shutting down due to “suspicious activity” and believed attempts to break its security protection, either by law enforcement or malicious hackers, that could have potentially revealed the IP addresses of Agora users.

Some markets, Hansa and Silk Road Reloaded for example, have adapted to these challenges by expanding trading beyond the darknet onto I2P channels, where they compete with non-darknet, more traditional marketplaces. One of the big players in this space, OpenBazaar is a bitcoin-based market that offers an inventory of more "socially acceptable" goods and services via the surface web. Their transaction framework allows trading directly to the customer, pivoting off the I2P technical construct by using multisig addresses and digital signatures to allow for secure communication directly between the buyer and seller.

Things became even more interesting when OpenBazaar recently announced that its next update (May 2017) will incorporate a “Tor mode option," integrated seamlessly within their desktop interface, which will allow users to opt to become a “relay," bouncing their traffic through volunteer computers around the world. This will effectively obscure and protect their identity, making the next version of OpenBazaar something of a "darknet lite" website. The creators of OpenBazaar are passionate advocates of anonymity and admit this feature will likely lead to an influx of vendors offering illegal goods and services, adding a darknet flavor to the marketplace.

As these marketplaces continue to evolve, the world of anonymous, marketplace-based trading is likely to expand and overlap. We'll be keeping an eye on these developments, and will continue to update you, our readers, on the ever-shifting world of darknet marketplaces.